Paid-Up Addition (PUA)

A Paid-Up Addition (PUA) is a small, fully paid-up whole life policy purchased with additional premium dollars on top of the base policy. PUAs are the primary lever for accelerating cash value growth in a whole life banking policy.

When you contribute to a PUA rider, those dollars:

1. Immediately become cash value — a higher proportion of PUA dollars convert to cash value quickly compared to base premium
2. Increase the death benefit — each PUA adds a small amount to the policy's total death benefit
3. Earn dividends — PUAs are themselves participating, so they also earn dividends

For banking purposes, a policy structured with a large PUA rider relative to the base premium builds a higher cash value-to-premium ratio earlier in the policy's life, making more capital available for deployment sooner.

PUAs have limits — you can only contribute so much before the policy becomes a Modified Endowment Contract (MEC). Well-designed banking policies are structured near (but not over) the MEC line.

Related terms: Base Premium, MEC (Modified Endowment Contract), Dividend, Cash Value